Deposit protection system in Kenya: an analysis of the effectiveness of the legal policy and institutional framework
Abstract
ABSTRACT NOT AVAILABLE Deposit protection, also called deposit insurance, is "a mutual insurance system supported by insured banks and administered either through a government-controlled agency or a privately held one.'" This involves granting of guarantees on the deposits held by the insured institutions for purposes of prompt payment of depositors in the event of the failure of any insured bank. The deposit insurance schemes serve to provide some form of protection to depositors who stand the risk of losing their hard-earned money in the event of bank failures. Further, they insulate the banking system from instability that could result from bank failures and loss of depositors' confidence.' The earliest historical evidence of deposit insurance scheme (DIS) is traceable to some States in the United States of America (USA) who around the 1840s were maintaining isolated deposit insurance schemes. However, national deposit insurance was the world over first introduced in Norway in 1921 with the establishment of a nationwide DIS for savings banks in the country. However, it was not until 1938 that a similar deposit protection scheme was introduced for commercial banks in Norway. Other countries in Europe, Finland and the former Czechoslovakia, followed establishing their national D IS in 1924.3
Publisher
University of Nairobi, Kenya